Bank Of Canada Business Outlook: Sunrise In The East, Sunset In The West

OTTAWA - The Bank of Canada says while plummeting oil prices have darkened the confidence of firms linked to the energy sector, Canadian businesses overall see brighter days ahead.

The central bank's latest business outlook survey, released Monday, found companies in energy-rich Western Canada planned to reduce their investments in equipment and hiring following the oil-price collapse.

On the other hand, Eastern and Central Canadian companies said they were planning to invest more, particularly in the manufacturing industry.

"Although the balance of opinion on future sales growth declined sharply, it remains positive, indicating that, overall, firms continue to expect a modest further acceleration in sales over the next 12 months," the Bank of Canada said in its analysis of the survey results.

"Firms located in the Prairies or linked to the energy sector, however, anticipate a moderation in the pace of sales growth in the wake of falling oil prices."

The central bank has not moved its trend-setting interest rate, which sits at one per cent, since September 2010.

Last month, Bank of Canada governor Stephen Poloz said while the country has seen signs of increasing exports, business investment and job creation, it will likely take another couple of years before the economy will have steady growth with inflation on target.

Poloz has also explored the potential impact of tumbling oil prices on the country's economic outlook, warning the free fall could slow the pace of Canadian GDP growth by a third of a percentage point.

The business outlook survey also found companies that expected to benefit — directly or indirectly — from the improving U.S. economy were more optimistic about the future than firms more focused on the domestic market.

"Expectations of a strengthening U.S. economic outlook are widespread," said the central bank's analysis, which also noted some companies expected the lower Canadian dollar would help them reclaim market share and increase competitiveness.

On Monday, the Bank of Canada also released its senior loan officer survey, which showed overall business-lending conditions were largely unchanged in the last quarter of 2014.